EU officials are pressing Britain, Germany and France to agree a compromise over trading rules intended to plug gaps exposed by the credit crunch in the $630 trillion market for derivatives and other specialised products.
Such financial products have largely been traded off-exchange in bargains between individual banks, which means a lack of visibility to regulators of where risks could be accumulating. Off-exchange trades also create risk in the financial system because they lack the guarantees which back trades on an exchange, which are underwritten by a clearing house whose role is partly to ensure the trade will be settled even if one side goes bust. After nearly two years of attempts to reach agreement among leading Member States on various sticking points, the EU's sense of urgency has been heightened by moves in the United States, where regulators last month agreed rules for Swap Execution Facilities (SEFs)
An update to the European Union's markets rules, dubbed MiFID II, was proposed nearly two years ago, but divides the bloc's members. EU president Ireland will put its 10th compromise to ambassadors. Failing a deal, it will put its suggestions to finance ministers next week, who must debate the rules in public.
Britain backs more competition in swaps and on-exchange derivatives to give investors choice as they face mandatory clearing for their trades. It also sees open access as a "quid pro quo" for having to accept a planned cap on banker bonuses. To bring the two countries closer, the presidency has proposed a review by regulators on the need for excluding exchange derivatives from "open access" for up to three years.
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